Respective Fee/Costs Awards of $232,435.50 and $101,078 Are Sustained.
Just to show you that the losing cases can unleash a lot of fee/costs exposure based on Labor Code statutes, the next one is a case in point.
In 1538 Cahuenga Partners, LLC v. Fabe, Case No. B222023 (consolidated) (2d Dist., Div. 8 Jan. 5, 2012) (unpublished), former in-house lawyer prevailed on wage/retaliatory claims against former employer in a Labor Commissioner proceeding (with the Commissioner suing employer for attorney’s defense costs with respect to prevailing in the underlying retaliatory proceeding), after employer and employer’s principal sued in-house attorney for malpractice. The Commissioner’s and the malpractice actions were consolidated, with in-house attorney and the Commissioner prevailing in these actions. The lower court then awarded Commissioner $232,435.50 in fees and costs under Labor Code section 98.7, which allows judicial relief to the Commissioner in the form of “any other compensation or equitable relief as is appropriate under the circumstances of the case.” It also awarded former in-house attorney $101,078 in fees and costs against employer’s principal for prevailing in the malpractice action, basing the award on Labor Code section 2802 (which requires an employer to indemnify an employee for any necessary expenditures or losses, including costs and reasonable fees, incurred by the employee in defending against third party claims arising during the course and scope of his/her employment).
Employer and principal’s appeals were unsuccessful.
Section 98.7 is broad in equitable breadth, and nothing in it indicates that Trope type restrictions prohibit fee recovery to the Commissioner for former in-house attorney’s own legal fees incurred in successfully prosecuting the retaliatory proceedings. Section 2802 did allow attorney entitlement to fees/costs for malpractice defense because it was against a third-party claim by the employer’s principal, not just the employer (hence, a true third-party claim). Employer’s argument that naming the principal was “a mistake” did not get very far.